Do I need life insurance? Life insurance may be the most important part of your financial strategy because it decreases risk, such as the risk that your loved ones won’t have sufficient funds if something were to happen to you. It may also serve to boost estate planning and charitable methods.
You might be the primary breadwinner, but even if your salary is the secondary one, its loss might still make a significant hole in the household budget. If you’re a stay-at-home parent, your life might still be worth safeguarding since your role as a caregiver would have to be filled by paid aid.
Do you Have a Family?
Life insurance only turns into a dilemma once you have dependants – that is, once you have a spouse or children. Simply put, life insurance safeguards those who rely on your income. If you die prematurely, life insurance gives a continued income to your dependents to substitute yours, until they can live comfortably without it. It can also supply a quick emergency fund for healthcare, legal, and funeral expenses, should family savings not be sufficient to cover them.
Are you Single?
If you are single and don’t have any dependents, it’s unlikely you need life insurance. With a little preparation, you can set up a low-risk savings account to pay for funeral expenses, and invest the cash you would have paid for insurance costs. You may even want to attain protection that will pay the estate, taxes on a large estate so beneficiaries don’t have to turn over assets at high prices to pay for them.
If you Answer Yes to any of the Following you Need it
- Are you married?
- Do you have dependent children?
- Do you have large financial obligations?
- Does anyone depend on your income?
- Do you have a large estate?
- Do you own a business?
- Life insurance is not an investment. It’s not the best plan to leave a life of lavishness for generations to come. The fact is, even though some life insurance policies (such as whole life) are coupled with a savings plan, the savings plan is funded only by your monthly premium. The life insurance portion of these types of policies maintains its fundamental purpose: income security for your loved ones after you have kicked the bucket. The amount of money your loved ones receive will only be equal to the value of the policy you purchased.
- In the event of a taxable estate, insurance is used to offset the tax load. For example, death can cause a substantial property tax. However, if there is insurance coverage, the payout of your policy can help pay for that tax.
- With regards to charity, there are a variety of ways to involve insurance. It may be as easy as naming a charity as the beneficiary of the policy. Or, depending on your tax circumstances and other goals, you might think of putting a charitable remainder trust in place and enhancing your estate with life insurance.